Project: Crowdfunding for local authorities

LGiU, in partnership with Spacehive, has produced a practical guide to crowdfunding for local authorities. It will help councillors and officers to unpick the different types of crowdfunding, their uses within and outside local government, and contains practical tips for those who wish to give crowdfunding a try.

About the guide

Crowdfunding has created a frenzy in the business community and the creative sector because of its ability to raise money quickly and flexibly, bypassing traditional sources of finance. But it has yet to become as widely adopted among local authorities. This is in large part down to the fact that councils are rightly cautious about new fads when it comes to handling public money.

However, much of this caution comes from confusion about what exactly crowdfunding is, how it can be used in a local government context and how to weigh its risks and benefits. We hope to shed some light on this area so that people working in local government can make informed choices about if and how to get started.

There are three main types of crowdfunding, which work in different ways and that are accessible to different organisations and groups.

Donations-based crowdfunding

Equity crowdfunding

Peer-to-peer (P2P) lending

While this is still new territory for local government, it is cheering to note that crowdfunding is already working well for many councils as we mention throughout the guide. It holds the potential to raise money for local charities and social projects, to earn higher interest on council savings, to plug funding gaps for services and to support local businesses and the economy. These opportunities will be different in each area so we will give ideas rather than instructions.